There is a glimmer of a possibility that we may get a very nice jump next week from some virtual portfolio rebalancing on a global scale.
Global equity funds have been on fire this year, especially in Asia, and money has flowed out of the US all year long. Now it is time for these World funds to take some of that money off the foreign tables and look to the undervalued (we hope) US markets as they position for next year.
I’m expecting the first sign to be a slowing, not a large drop, in the Nikkei’s growth over the next few days followed by a general rise in the S&P above 1,270.
If we don’t make this critical turn and the S&P drops below 1,255 then there may be no hope in the short term – the next few days will tell.
The Dow has shown good support at 10,800 but is, as I always say, a silly indicator.
For Nasdaq support, look to 2,220 but, as I mentioned, without the Nas, this market is just doomed anyway. MU had a shocking disappointment yesterday, so the entire chip sector may drag the market down today.
Microsoft has been singlehandedly weighing down the Nasdaq, both by it’s own pathetic performance and the ripple effect caused by the company’s BS promises to layers of retailers that there would be 6 times more XBox shipments than actually materialized.
Don’t forget, MSFT (through the vendors) has taken the money in the form of deposits/reservations so that is over $1Bn of holiday shopping money that is out of circulation but not spent yet. There are also repercussions of other game sales being put on hold etc…
Gold looks like it may be bouncing off of $495, this was foretold yesterday by the $1.50 jump in NEM yesterday, even as gold declined. Apparently, the miners are the first to know when gold is going to move.
It took a little longer than I thought but the oil patch seems like it may turn up. OPEC says it may cut back production depending on what they see in China. We still can’t figure out China so I can’t imagine what OPEC expects to see in those tea leaves.
